When Can We Expect A Profit From Cronos Group Inc. (TSE:CRON)?

With the business potentially at an important milestone, we thought we'd take a closer look at Cronos Group Inc.'s (TSE:CRON) future prospects. Cronos Group Inc. operates as a cannabinoid company that engages in the cultivation, production and marketing of cannabis products in Canada, Israel, and Germany. On 31 December 2023, the CA$1.3b market-cap company posted a loss of US$70m for its most recent financial year. Many investors are wondering about the rate at which Cronos Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Cronos Group

According to the 7 industry analysts covering Cronos Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$1.7m in 2026. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 62%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Cronos Group given that this is a high-level summary, but, keep in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. Cronos Group currently has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Cronos Group, so if you are interested in understanding the company at a deeper level, take a look at Cronos Group's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Historical Track Record: What has Cronos Group's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cronos Group's board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.